How To Start A Successful Digital Transformation Journey
Updated: Jun 8, 2022
A five-step guide for the modern CEO of a small to mid-sized manufacturing business.
Digital technology is transforming manufacturing. So, a critical question for any manufacturing CEO is “do I have a solid strategy to compete?”.
A good way to answer this question is to picture your market in three years. Who are the leaders in your space? How are they using technology to be more efficient and win more business? Do you have a clear plan in place to be on par?
Fuelled by disruptive technological innovation, manufacturing has become a hyper-competitive industry, as companies across segments are increasingly adopting digital transformation (DX) strategies to improve operational efficiency, reduce cost, and generate more business value.
In fact, in 2021, Foundry reported that 91% of organizations have become or plan to become “digital-first” businesses.
So, if you’re not feeling great about your current digital transformation strategy, you’re probably at risk of losing market share to companies that are figuring out how to use technology to improve business performance.
However, developing a technology strategy that puts you on a solid growth path can be daunting. So, we have put together this “how-to-guide” to provide you with a framework to work from.
Your processes are running fine, and you have no time. Why should you still consider digital technology disruption?
While many leaders we work with are worried about not leveraging technology well enough, there are plenty who have a tough time understanding the urgency, and specifically how to create market advantages that translate into greater profitability. At a high level, why modern digital technology is such a game changer is because, when applied well, it enables:
Improved value creation: From a Lean perspective, every company in business has a “value-stream”. A value-stream represents the series of steps that a company takes to create and deliver a product or service to its customers. With an effective digital transformation strategy, companies are leveraging technology to improve the effectiveness of their value stream, increasing the value it provides to the market. This leads to better competitive positioning and increased profitability.
Data-driven continuous improvement: Leveraging modern technology, manufacturers are harnessing the power of data and analytics to become data-driven. Data-driven organizations empower their workforce to make informed decisions in their day-to-day activities. For the lean manufacturer, this enables a “relentless pursuit of perfection” through data-driven continuous improvement.
Increased business agility: Along with leveraging modern digital technologies, modern manufacturers also apply modern lean and agile methodologies to manage its business operations. This creates a “razor sharp” focus on delivering the highest return on investment using an iterative, prioritized methodology which is scalable and allows course correction at any time.
Lower technology total cost of ownership (TCO): Modern cloud platforms lower a company’s total cost of technology ownership while enabling integrated access to advanced technologies ie. Low code apps, big data analytics, IoT enablement, etc.
The Five-Step Guide To Your Digital Transformation Strategy
Essential components of building a modern digital transformation strategy for manufacturers.
Businesses around the world are looking at digital technology transformation to ensure they have the technology backbone in place to support their larger business vision and market strategy.
Getting the digital transformation strategy in place isn’t overwhelming if you have the right blueprint to follow. Here’s the formula that has worked very well for many manufacturing enterprises across segments.
Step 1: Defining your digital technology vision
The first step is establishing a clear vision for how you will need to use technology to compete in your market space. To put it in sports terminology, the goal is to anticipate where the ball will be. Not where it is now.
We typically recommend looking over a 3-5 year timeframe.That may seem long, but it will be here before you know it. This vision serves as your “true north” to guide your technology decision making right from the beginning.
Core inputs to your technology vision include:
Assessing your market & competitive landscape: Develop an understanding of how technology is shaping your market and how your competitors are using it to create unique value. This understanding will help you understand what you need to have in place to effectively compete with your rivals.
Defining your technology use cases: Identify your key market challenges, competitive threats and internal “pain points”, and use them to develop a prioritized list of specific instances where technology can add substantial value to your organization. This will help you identify exactly how digital technology will benefit your organization.
Understanding your current state: Evaluate the infrastructure that you currently have in place to support your technology use cases. It's important to understand where you are now, so you can map the best path to where you want to be.
Using these as input, you can see what capabilities you need to have in place to be successful, so you can start now iteratively enabling your vision.
Step 2: Formulate digital technology strategy
A well-thought-out digital technology strategy highlights methods to implement the technology use cases. It indicates precisely how the current infrastructure will be upgraded or which third-party tools or SaaS products would be required.
It evaluates cloud strategies like on-demand and on-premise deployment or any IaaS and PaaS services that can be used to deliver digital initiatives. The strategy indicates any process overlaps and inconsistencies that could waste valuable resources.
While the specific components of your strategy will vary depending on your vision, they commonly include:
I. Cloud platform strategy
Cloud technologies are revolutionizing every aspect of computing, so you need to understand how you will capitalize on this shift. A robust cloud strategy offers faster time to market, reduced risks, on-demand scalability, while lowering your overall cost of technology, and providing you with an ever-expanding set of integrated tools to meet your technology goals.
In this step, small and medium manufacturing businesses should evaluate various cloud service providers (vendors) according to the DX vision. You can decide about cloud development and deployment strategies, including various technologies like IaaS, PaaS, and SaaS, aiming to deliver high-quality products at reduced costs.
II. Data, analytics, and business intelligence strategy
Organizations are generating data at an unprecedented rate. As technology evolves, your data will increasingly become one of your most important competitive assets.
With modern data catalog and metadata management tools, companies can drive better decision making across all business functions and democratize data across the organization to drive a data-driven culture.
III. Workflow optimization analysis
Automating previously manual tasks is a big piece of the value modern technology offers. Companies should analyze their existing processes to identify optimization opportunities and loopholes, enabling them to create smarter, more efficient workflows.
For instance, companies can evaluate the impact of using low-code apps, such as Microsoft PowerApps, to automate manual workflow processes. Or IoT enablement to collect and analyze data from their production equipment.
Similarly, they can evaluate ETL tools to optimize data ingestion and integration processes. This significantly improves the company’s ability to create market value.
Other components of your strategy may include:
3rd party vendor evaluation
Buy vs. build analysis
Training plan
Step 3: Implement digital transformation technology roadmap
Once you have a vision of where you want to go and the technology strategy to take you there, the next step is to establish a step-by-step roadmap for rolling out new digital capabilities over time.
A primary objective of this roadmap is to sequence the delivery of platform components in such a way where you get to view the business value being realized at every step, while working on operationalizing your full platform strategy.
Here you consider various critical aspects of the strategy roadmap:
Budget limitations - This is a critical step in making most decisions going forward
Resource allocation strategies - Start with the stakeholder identification and communication strategy in order to ensure internal buy-in and timely decisions at every step. Do you have team members that have the knowledge and experience of digital technologies? And do these resources have the bandwidth to manage additional KPIs?
Technology enablers - Required to achieve your objective
The technology roadmap should also assess the disruption caused by the introduction of the change in the existing organizational processes and a plan to compensate for those. It is important to prepare for business continuity while the transformation is in progress.
Step 4: Arrange the remaining pieces of puzzle together
After you have successfully accomplished the above three steps, the remaining questions to be answered are simple, measured and effective. Let us quickly have a look at some of the final list of decisions you will need to make to have a successful digital transformation journey.
I. Staffing plan and budget:
From leadership roles to managers, team leads, and engineers, your digital transformation strategy cannot succeed without an effective team. Hiring high-quality resources depends on your budget allocations.
For instance, hiring an experienced chief digital officer (CDO) or chief information officer (CIO) would cost more initially but can potentially save a lot of wrong investments and facilitate increased revenues in the long run. Companies should also decide if they want to hire generalists or specialists for particular roles.
II. Lean-agile digital transformation
The adoption of a best-practice project management process improves a brand’s ability to leverage technology to drive value throughout its organization, contributing to increased efficiency and profitability. Lean-agile is emerging as the best practice project management framework for modern organizations. At a high level, lean-agile is composed of two components:
Lean portfolio management (LPM): Integrating LPM into a company’s technology planning establishes a clear link between its business objectives and technology strategy/investments as well as creates a “razor-sharp” focus on achieving the business objectives.
Agile project management: Agile isn’t just a project management model, but rather a framework for establishing a culture of collaboration, transparency and efficiency. With Agile at the heart of your digital transformation journey, you can quickly adjust to new information, making the ability to pivot a competitive advantage.
Step 5: An alternative to everything above
This step is an addition to make everything outlined above easy for businesses of all sizes. Two of the main elements keeping leaders away from adopting a digital transformation strategy are - 1) lack of bandwidth and 2) lack of in-house knowledge and experience in digital technology implementation.
Hence, companies around the world are looking outwards for digital transformation projects, where you can bring in experienced technology experts that can hand-hold the organization right from designing the digital transformation vision, to finding the right technology solutions and phased implementations. Outsourcing companies offer specialized resources that are ready to be deployed immediately, not requiring any training or administrative overheads.
Additionally, an outsourced digital transformation model is the most cost effective approach for small-to-midsize organizations, as you can share highly skilled, but expensive resources across other organizations.
For instance, having a highly experienced CIO is essential to setting direction and driving execution, but cost restrictions with a typical SMB do not allow hiring a seasoned CIO.
Therefore, sharing this resource across multiple organizations, as an outsource model provides a highly skilled digital transformation team while reducing the overall cost of managing it.
Business Transformation With Adaptive Product
A comprehensive digital transformation strategy aims to optimize business processes to gain a competitive advantage and maximize revenue. Adaptive Product provides digital technology coaching and consulting for small and medium enterprises in the manufacturing space enabling business transformation and improving profitability.
IDC FutureScape research suggests that 90% of enterprise applications will embed AI technology by 2025. Adaptive Product helps forward-thinking businesses adopt machine learning in their manufacturing workflows and offers many services, including inventory management, predictive maintenance, anomaly detection, demand forecasting, supply chain management, and more.
Book a free meeting with us to learn more about how we can supercharge your digital transformation journey.